Related Posts
How much money do you have saved up?😳
Conversation Starter
Bowl Leader
More Posts
Community Builder
Is Huron hiring right now?
Anyone on pros and cons of A&M PEPI group?
Why does Newark close tsa pre lanes? Terrible
Coach
Covid lockdown at home
Mentor
Ok, what does ‘F’ mean
Additional Posts in Big Law
Coach
Subject Expert
New to Fishbowl?
Download the Fishbowl app to
unlock all discussions on Fishbowl.
unlock all discussions on Fishbowl.
Coach
Once you get senior, your annual bonus basically is the down payment. So save that for 2 years and you have enough and your salary covers the mortgage pretty easily. No one (at least no one rational) is buying these houses with straight cash.
Rentals are not a hot business in NYC tho. I’m a RE investor and would not touch NYC. Very difficult to cash flow there. I live in NYC and invest in other markets (and rent for the record).
Subject Expert
Why would you want a $1M home? Property tax, mortgage, HOA fees, and maintenance are probably ungodly. Unless you are intending to live in a house like that for a minimum 5-10 years, I say it's prudent at such a young age to invest in the market instead. I reckon 99% of people who buy a $1M home would be just as happy in most 500-600k homes. Don't be house rich but cash poor...having such a large amount of your portfolio allocated to one asset, and in illiquid one at that is rather ill advisable. What happens if you want to move or quit your firm but now can't afford to? Plus, what happens if you were to become disabled or something and lose your job? There are a ton of insurance considerations with this, especially if you have a spouse that makes substantially less. She may not be able to afford to live there.
Subject Expert
Stocks have done even better over the last 8 years, and will continue to do better over the next 8.
I try to not count other ppl's money - there are all kinds of situations that you don't know about that could affect that. Are they married? Did they have a career prior to law? Did they receive a gift from parents (or parents-in-law, see question 2). Did they receive an inheritance. Did they drunkenly buy 1k of Bitcoin 8 years ago etc...it could be anything.
I hear you OP. I'd just say try to compare yourself only to your prior self. That's the only comparison that will work because that's the only situation where you are in full possession of the facts
Your income goes up an incredible amount after second year. I had barely anything saved going into third year — maybe $40-$50k. Now I’m a sixth year with over $800k in net assets. I definitely have enough for a down payment on a $1.5M home, just counting me and not my partner.
Mentor
Yeah this is big. Even the jump from second to third is huge with bonus and the salary jump from third to 4th is more than the average person makes all year. As a third year I feel like I’m in a drastically different financial position than I was as a first year
Subject Expert
The bonuses make a big difference and made it much easier for me to throw together a substantial down payment even for the CA market. That said, I have not bought a house yet because it makes me feel panicky to actually do it lol. When I do, it will be a mortgage that I could comfortably afford even if I decided to go in house, because that’s the most realistic alternative that I need to plan around.
If your market has much less expensive homes, get one of those. I certainly wouldn’t suggest a million dollar home unless that’s simply what real estate costs where you are, as is the case here.
Mentor
Look into professional mortgages. You can put very little down and not have to pay PMI. I felt the same as you until I learned about those
Subject Expert
Guilty as charged (although it’s not a “home” lol it just costs that much for a small apartment in the city I live - I would have got cheaper if I could still live downtown - purchased pre-Covid when commuting was more of a concern). I did not have loans due to scholarship but I also had no financial assistance/inheritance and was also giving some money to my parents. You can do it by saving aggressively (I lived in studios until I was a senior). The salary/bonus increases are really large as you get more senior. And I wasn’t even on the current salary scale which is much better than what I was getting.
Keep on saving/investing! I didn’t do anything special with investing, just robo investing to match the market, wasn’t great every year but has been an overall win over the last decade. I do recommend investing now while the market is low (although it’s of course scary to see that right now you may lose money day to day, in 5 years I bet you come out ahead).
You do have to consider that if you’re planning to take an in-house exit at $200k or something this may no longer be affordable. Also if you have a SO you can afford more together (but I do not).
Was saving for a wedding and then covid happened and my then girlfriend and now wife and I decided to just get married and not have a wedding. Being remote at home with my wife also meant way more time to eat in than eat out. Also for the first year of the student loan pause saved for a down payment instead. We’ve also been careful generally and live like we make half of what we make which, as a senior associate, has allowed us to still live well and have a lot of fun and not have a spartan life style while building a nest egg between savings/investments and the above to get the 1M home in a high COL city but also feel comfortable/ensure we can pay the mortgage if I took a pay cut to go in house. Still have some student loans but balance way down due to the pause and had paid down pretty aggressively the first few years before wanting to ensure I was saving for a home down payment. Everyone’s circumstances are different so I can’t pretend that what I did applies to everyone and but I’ve found that the senior associates who, if they were able to by circumstance, lived as if they were making their years 1-2 salary even as they became more senior rather than giving in to lifestyle creep had an easier time of building the financial security/stability to buy a home even in high COL areas. Also for clarity, we aren’t two biglaw associates which makes things much easier generally. I’m a SA and my wife makes solid money but far less so double income but nothing like a double senior income in the 6-750k+ range.
I also think dual income makes it easier. Im a senior director and my wife is a senior director at her banking firm. I wouldn’t say we are living the “life” or have bought anything lavish, we just hit the cusp of $1mm for our home (out of necessity), but as people said, the bonuses really make a hell of a difference
i assume they mean they’re in a high col market
Subject Expert
Many of these million dollar homeowners are barely hanging on. First time home buyers are frequently putting only 3.5% down, which is like a third year associate bonus. And then tons of them are paying huge amounts of their income to service the mortgage that could go underwater with a modest housing downturn. It’s *really* easy to get a $1MM mortgage as a BL associate if you are determined to do it.
Some homeowners are obviously doing fine, but don’t assume that you are way behind other associates when you don’t have any visibility into their real finances. If you did, it would often shock you.
Inflation at 7%, mortgages are not, especially for those who bought at 2.75%. Made $500K on our house in a year. As long as you evaluate the market carefully and aren’t underwater, you can always sell your house aka an asset if you lose your job.
Subject Expert
You don’t make anything on your house unless you both sell *and* downsize, and I know like 2 people over the course of my entire life who have ever downsized. Home equity is so overrated (unless you live in an inexpensive market, which doesn’t apply to many of us ).
Buying a house feels real far away. Right up until you do it. We did a starter house pre-kids and then a bigger one with kids years later. Don’t feel like you need to start with some dream house. It’s an excellent investment if you buy something that makes sense for you in a market where home values tend to rise. My first mortgage+taxes was less per month to maintain than I’d been paying in rent, + now building equity, +appreciation, etc.
Don’t buy so much house that you feel like you can’t leave. It’s not worth it; no matter what your spouse/SO or kids might say about liking a certain house. People get used to the house that they are in, for better or for worse and people can get used to having less space. Low costs give you the flexibility not just to move to a different job but it actually gives you more choices.
All that being said, housing can be a good investment if done right and can help you build equity that will let you leave Biglaw (particularly if you leave and move from a HCOL city to a LCOL city).
Not everyone puts down 20%. I put down 5% on a half a million dollar home. My PMI is $87.
Enthusiast
4th year with a million dollar home in So Cal here. Bought mine at $700k 2 years ago with 5% down and am now working at getting PMI removed. It’s very doable and one of the best decisions I made — why throw money away for rent when you can be buying equity in a home.
Subject Expert
When only the rich can afford it then ‘just a house’ is a house for the rich. Also, this is a BigLaw bowl… we are rich.
what do you mean by comfortably afford? the down payment? the mortgage itself?
Down payment, mortgage and have a sizable amount in savings left over.
Coach
Spouse and I have talked about whether to do this. Any place larger than our apartment that doesn’t require $100k+ in repairs at least $1M in our city. Friends who graduated from law school at the same time I did have bought places in the $1.5-$2M range. But the idea of purchasing something that expensive makes us both sick with anxiety…
Honestly, it’s our cats making us consider it seriously. We recently had to move and finding another apartment that even allows pets, much less more than one, was a nightmare.
Coach
6th year. One friend and his spouse bought while we were in law school, but admittedly, their families helped them. Another bought last year.
How much of their paychecks do most people on here save?second year here